A new planning model has been introduced in Westminster, helping to balance the books for development companies and make affordable housing viable even in high value areas.
Under this new model, the landowner agrees to sell the land at under the market value in return for credit which can be used against payments that might have to be made in projects where affordable housing isn’t viable.
In the landmark Westminster case, commercial property company Land Securities sold a site to private affordable property developer ‘Pocket’ for £2.3m less than market value. This allowed Pocket to create the homes at 20% less than market value, despite the fact that the expensive nature of the central London area meant none of the usual savings could be made.
The result was a 32 home development on Fermoy Road, Westminster, providing one bedroom flats at affordable prices to households that meet the income criteria used for the mayor of London’s first-time buyer scheme (those earning less than £61,400 a year).
Buyers are also tied by a covenant on the properties, ensuring that further sales are at a 20% discount on the market rate and to a household that qualifies for affordable housing, with the prior approval of the council.
For Land Securities, this also meant £2.3 million in credit to offset planning obligations on other developments.
Marc Vlessing, co-founder of Pocket, is reported to have said the scheme could be a ‘massively important’ way of funding affordable housing developments in high-value areas.
He commented: “We are talking to Hammersmith & Fulham, Kensington & Chelsea – talking to a number of lead boroughs – Camden – in which there are large developers with big affordable housing obligations, and where our credit model creates a new currency.”
Philippa Roe, leader of Westminster Council, said: ‘This new scheme lays the foundations of a new era in affordable housing in the capital.’
Thus the scheme could provide an important benchmark for other London Boroughs, where affordable housing projects are extremely rare, to ensure that lower income households can make that important first step onto the property ladder into good quality accommodation.